What mortgage type is best for landlords?

What mortgage type is best for landlords?

You became a landlord to earn a good living, right? Then the type of mortgage you take out needs careful consideration as it has a direct effect on your profit. But what type of mortgage is best for a landlord?

To buy a rental property, you need a specialist buy-to-let mortgage. There are various options, such as fixed/variable rate, interest only/repayment, and limited company mortgages – all with pros and cons. The right one depends on your portfolio size, business goals and financial situation.

Whether you are a first-time investor or have an established property portfolio, you should consider your mortgage choice very carefully. We’ll go over the basics in this blog post, but for more personalised advice, please feel free to get in touch with Bliss Financial, mortgage brokers in Darlington.

What mortgages are available for buy-to-let property?

To buy a property that you intend to rent out, you need a buy-to-let mortgage. You can take out a buy-to-let mortgage as an individual, partnership, sole trader or as a limited company.

What is a buy-to-let mortgage?

A buy-to-let mortgage is designed specifically for landlords, and so comes with different terms and conditions than a residential mortgage, based on the increased risk to the lender. So you can expect this type of mortgage to come with higher interest rates attached and also a higher loan-to-value (LTV) ratio.

Most landlords opt for interest-only buy-to-let mortgages to keep monthly overheads at a minimum. The ideal scenario is that rental income exceeds monthly mortgage payments, leaving you with a healthy profit.

How is a buy-to-let mortgage different to a residential mortgage?

There are several key differences between a buy-to-let mortgage and a normal homeowner’s mortgage.

  • Interest rates – the interest rates on buy-to-let mortgages are higher than on residential mortgages. As the rental market can be unpredictable, lenders see buy-to-let mortgages as a higher risk. So they charge a higher interest rate to protect themselves in case the borrower defaults on payments.
  • Deposit – because of the increased risk to the lender, the minimum deposit for a buy-to-let mortgage is higher than for a normal mortgage. It is typically 25% to protect the lender’s interests.
  • Mainly interest-only – while they are available on a repayment basis, the majority of buy-to-let mortgages are interest-only. That means the monthly repayments are paying the interest and not the debt.
  • Regulation – buy-to-let mortgages are not usually regulated by the Financial Conduct Authority (FCA). The exception to this is for ‘consumers’, i.e. those letting to family members.

Why can’t I let out property with a residential mortgage?

When you take out a mortgage for your main residence, the lender will base their risk assessment on you living in the property. Lenders associate more risk with buy-to-let property due to the turnover of tenants and the unpredictability of the rental market, so the rates and terms are adjusted to give them greater assurance.

You could face serious penalties from your lender should you be found renting a property out with a residential mortgage.

Buy-to-let mortgages for limited companies

In order to get a mortgage for a rental property through a limited company, it must be registered as a Special Purpose Vehicle (SPV), simply meaning that the sole purpose of the company is to buy, sell or let property.

Many landlords choose to transfer their portfolio to a limited company to take advantage of tax savings. However, there is a stamp duty implication, so it’s best to talk to an accountant as well as your mortgage broker before you make the move. Fees and interest rates also tend to be higher for limited company mortgages.

What is the criteria for a buy-to-let mortgage?

When assessing eligibility for a buy-to-let mortgage, lenders make similar checks as they do for residential mortgages, e.g.

  • a good credit history (evidence of paying bills on time, especially on an outstanding mortgage)
  • proof of income (rental, salaried and self-employment)
  • your age (some lenders have a minimum and maximum age limit)

How much deposit will I need?

Most buy-to-let mortgage lenders have a loan-to-value (LTV) limit of 75%, meaning that you will need at least a 25% deposit, although it is sometimes possible to proceed with a 20% deposit.

How much can I borrow?

The amount you can borrow depends on your deposit value and also your rental valuation, i.e. how much rent you will earn per month. Your lender is likely to stipulate that your monthly rental income covers 125% of your mortgage repayments.

Interest-only mortgage vs repayment mortgage

A lot of landlords, especially those with a large portfolio, favour interest-only mortgages as they have lower monthly repayments, which helps to boost their profits. Typically, rental income is used to cover the repayments.

Their strategy is usually to sell the property when it grows in value, at which point they repay the capital to the lender and move on to their next investment.

Repayment mortgages are an option for landlords who are looking to own the property outright at the end of the mortgage term. Monthly repayments are higher, but you will typically pay less interest than on an interest-only mortgage.

Repayment mortgages for buy-to-let properties are more scarce, and it’s likely you will have to approach specialist lenders. This is where a good mortgage broker, like Bliss Financial, can be of value, as they have access to deals that are not on the high street.

Variable rate mortgage vs fixed rate mortgage

A fixed-rate buy-to-let mortgage term is usually 2 or 5 years, meaning that you can keep on top of your costs and plan for future property investments. But the rates are usually higher than variable-rate mortgages, and you won’t benefit if the interest rate falls, of course.

A variable rate is attached to the Bank of England base rate, so your repayments will go up and down accordingly. Variable rate mortgages (including discounted variable rates and tracker rates) are a far more risky option for landlords, considering how unpredictable the economy is right now (March 2023). But if the interest rate does fall, there are big savings to be made on larger portfolios.

Get the right landlord mortgage with Bliss Financial

To get the most profitable mortgage deal for your property investments, it is best to consult a mortgage broker.

Bliss Financial can offer you independent advice on the type of mortgage that is right for you and take care of the admin so you can get on with managing your properties. We have access to many high street and specialist lenders and can find you the best mortgage deal to suit your business goals.

Please get in touch for an informal chat about your buy-to-let mortgage requirements.


Buy-to-let mortgages are typically required for rental properties. The interest rates are higher due to the perceived risks, but terms tend to be more flexible as these types of mortgages are not regulated by the Financial conduct authority (FCA).

Landlords have a choice of a variable or fixed rate mortgage term, depending on their appetite for risk. Most landlord mortgages are interest-only, as they offer lower monthly repayments.

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Amanda Marsden

Amanda is the founder and owner of Bliss Financial. She has been helping clients with their mortgage and insurance needs for over 15 years. Her passion is to fully explore the options open to them and ensures the process is easy with no stress. She also specialises in helping clients invest in buy to let property and landlords.

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Selected from a number online because they stated that they have experience working with people from the military. This was essential given how moving on assignment often can be a negative for many banks when it comes to lending. Amanda was excellent and the process was swift and easy. We had planned to visit face to face but the process was just as high quality over zoom and phone.
Richard S.
Amanda is great, everything was explained clearly and always responsive to queries, would highly recommend.
Pavitar P.
This is my second time remortgaging through Bliss and Amanda. The service provided has made my life stress free and Amanda was thorough with her research into what deal and term would be best for me based on economic uncertainty and where I am atthis point of my life.I'd not use any other mortgage broker ✨
Harriet L.
Amanda was extremely knowledgeable and helpful from minute one. I am very grateful to her for diligently working within a fairly tight timeframe to identify and provide me with the right product.Her communication throughout was prompt and well-received. I look forward to using her services again.
James D.
Excellent service. Fully deserving of 5 stars. Nothing to fault. Great communication and everything went through in time with no issues. Would highly recommend Amanda Marsden.
Luke H.
Amanda was absolutely brilliant from start to finish. She helped us secure our forever home mortgageWould 100% recommend for anyone needing financial services of any kind!
James B.
Absolutely perfect service from start to finish, no stress, no hassle can’t recommend enough. Thankyou
sarah W.
We have used Amanda for many years. She knows exactly what she is talking about and offers the best advice. I cant recommend Amanda enough if you're thinking of getting a mortgage or going through a Re-Mortgage. She reassured us throughout the whole process and was in touch every step of the way. Thank you Amanda, here's to many more years.
David J.
Amanda was amazingly helpful and made the whole process hassle free. Even when I changed my mind a few times nothing was a problem and the end result was exactly what I was looking for. I would highly recommend Amanda and the team
Atha D.
We used Amanda a few years ago for our first mortgage. She was an absolute hero for us. She sat us down and explained everything thoroughly putting all out worries at ease as first time buyers. We had issues with our chain which meant our mortgage offer lapsed and Amanda was there every step of the way right through to the day we moved in. Due to remortgage in the next year or so and I will always go back to Amanda.
Anya K.
Once again very helpful and prompt in helping us with remortgaging our property, highly recommended
Natasha G.
Bliss WILL get you the best mortgage solution possible. The best mortgage broker around!!
michaela M.
Amanda was absolutely brilliant from start to finish. She helped me secure my first mortgage and also helped with organising the best deals on life and home insurance for my house. Would 100% recommend for anyone needing financial services of any kind!
Nathan C.
We specifically selected Bliss as financial advisors for our mortgage, as we'd read great reviews from other first time buyers. Amanda was so welcoming and helpful, introducing us to the whole process. We actually went to her thinking we were fish out of water, and wanting to but not expecting to but for a few years, just wanting to get our heads around it. However everything felt easy, quick and well explained and we were accepted for a within approx 2 months of starting our search. Amanda has been amazing throughout the entire process - even personalising the way she presented documents to us to suit our styles (me, needing to talk everything out and my partner more graphs and charts!). Evening appointments were organised to work around our work schedules. She was in constant communication with all stakeholders, chasing things up for us and since moving, also supporting with insurances. I'd highly recommend Bliss, and specifically Amanda for any financial advisory services however particularly first time buyers, as no question feels like a silly question. For future purchases, selling, and any other financial services - we will definitely return to Bliss.
Amber B.
Great service. Professional, friendly and efficient. Amanda did a great job in advising me and then finding and securing the best mortgage to suit my situation
Ed T.
Absolutely amazing service, couldn't have received any better. Very friendly and quick at replying to all enquiries. Very understanding of our circumstances which were difficult but still got us everything we needed for our new house. Thank you again Amanda, will be recommended you to everyone who needs a mortgage broker ☺️
Stacey G.
Amanda helped us to secure our first mortgage. She was on hand for support all the way through the process and very helpful in explaining things in a more simple way to help us to understand. She kept in contact with us regularly throughout the process and really made us feel at ease. We cannot thank Amanda enough for her support and help.
Annise M.
I came across Bliss financial solutions by google search when desperately trying to find a mortgage advisor who could do the impossible (secure a DiP quickly, that met my difficult short term self employment circumstances).Amanda from Bliss has been a pleasure to work with. The perfect balance of professional and friendly, incredibly organised and certainly not deterred by a challenge. I’m really grateful for the time and effort she put into my case to allow me to secure the house I wanted within the mandated timeframe. Thank you so much Amanda and Bliss for allowing us to get our new home 💜
heather U.
I just want to say how amazing Amanda at Bliss financial is!!. My partner and I were looking at buying a shared ownership prooerty and everything started happening very quickly ... but Amanda just took over from the start and literally kept me at ease the whole way . Herprofessionalism throughout was second to none and helped with every aspect of the process. Thanks to Amanda we now have the most beautiful home and we will be forever grateful for everything she has done for us. I would 100% recommend Bliss Financial.
charlotte C.
Excellent service. Amanda really took the stress out of remortgaging for us. Highly recommended
Amy G.
Switching mortgages has always been a frustrating and time consuming experience but using Bliss made the process seamless and most importantly stress free! They were excellent and I would highly recommend their services.
Neil G.
Amanda has been totally invaluable through our first home buying journey. Always on hand to answer the hundreds of questions with her excellent knowledge and guidance.I would absolutely recommend Bliss Financial Services.
Matt D.
We have been in our new house for nearly 2 months now all thanks to Bliss Financial Solutions, Amy was amazing sorting our new mortgage out and talking us through everything we needed to know. Very smooth process with good communications. Thank you very much. 🙂
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Exceptional customer service, professionalism and market knowledge.
George R.
Really excellent & supportive service from start to finish throughout mortgage process, from initial enquiry through to successful completion, friendly, knowledgeable and always happy to take time to answer any questions - great organisation.
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Brilliant lady Amanda, always positive knowledgeable and helpful. Have no doubts in recommending her and Bliss Financial Solutions
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Very prompt and professional team. Helped us out no end! Highly recommended
Wayne C.
I would like to thank Bliss Financial Solutions for amazing, professional and swift responses during the process of my first home purchase.It has been an absolute pleasure each time I have met you and will 100% have no hesitation for contacting you again for future requirements and highly recommending you.
Paul K.
We have recently used Amy at Bliss to help us get a mortgage. After having a stressful time at high street banks and other mortgage brokers, we contacted Amy for help. Amy was absolutely excellent and the work she does is outstanding. Amy went above and beyond and managed to find us a mortgage in a matter of days. Throughout the whole process Amy kept us up to date and managed the mortgage application seamlessly despite a stressful time with other companies. I would like to express my many thanks to Amy and the team at Bliss for being so excellent and thanks to them we now have the keys to our new home.
My experience with Bliss Financial was excellent, everyone went above and beyond. Provided the best advice and more. Our mortgage was sort with out any stress. I will continue recommending to friends a family looking for mortgage advice.
emma W.
First class customer service, highly recommend Bliss Financial Solutions LTD to anyone that values a professional, efficient and personal approach. Being first time buyer my partner and I had very limited knowledge around mortgages and all things connected. Amanda and her team went above and beyond to ensure we understood everything and provided advice when we had any questions with immediate response. Bliss financial limited we thank-you kindly for making the whole mortgage process so easy, you took all the strain off us especially need due to the birth of our daughter 3 weeks ago you made the mortgage process easy and hassle free. I will definitely be a customer for life and if there is anyway I can share your company’s profile on social media please let me know as I would love to recommend your service to others.Many thanks Melissa Hodgson, Andrew and Eloise - three very happy customers 😊
Melissa H.
Amy and the team were absolutely amazing! Nothing was too big. We didn't really know much about the process and Amy explained everything so we fully understood! We couldn't have done it without the team 100% would recommend to anyone! Thank you all so much ❤️
Rebekah F.
We used Bliss to re morgage our property. Amy was absolutely fantastic, made everything feel really easy, she was clear in all her explanations, open and honest with setting expectations, and really knowledgeable. The whole process was really smooth. We also discussed life insurance which was something of a priority giving we had just had a little boy recently. Amazing service. Would highly recommend. We will definitely be using again for any future mortgage or insurance needs.
Lauren A.
Excellent service, they really came to the rescue after being messed about by our current lender, amazing absolutely amazing. Just wish we went to them sooner would have saved a big headache 😃
Michael C.
Efficient and friendly. The team helped source the most appropriate mortgage for us at a very busy and pressured time for interest rates and timeframes. They were very helpful in expediting the completion when our solicitors were holding up proceedings. The little gift afterwards was much appreciated also. Would recommend.
Kirsty T.
Bliss Financials was a vital part of my journey to home ownership in the UK. They always gave personalized yet professional advice and were always accessible and responsive all through the process. They were very thorough, transparent and client centered; offered and discussed all the available options to enable me make an informed choice. I would totally and wholeheartedly recommend their services and I am very grateful to Amy who handled most of the process as well as Amanda and Sophie. Great team/firm!
Nwosa C.
I would like to praise the excellent service of the Bliss Financial Solutions LTD.I have a brilliant experience with this company. I was buying a house for the first time and Bliss Financial advised me on every step of the process (mortgage, insurance), offering me suitable options that I could choose from. I always got great offers and still was in control.All members of the team (Amy, Sophie, Amanda) are brilliant, very professional, friendly and responsive.I am very grateful to Amy (my consultant) as she did help me very much throughout the process, nothing was a problem,I received responses straight away and she also prompted other parties to act swiftly (lender, insurance companies, solicitor, etc.).If I need mortgage or insurance in future, I will definitely ask Bliss Financial for help again.
Michal P.
I am now on my second mortgage which was arranged using Bliss. What an outstanding service. From start to finish the Bliss team were great in answering queries that I had. They even pushed to get me an extension to my offer seeing me secure a great rate before the recent rises. This certainly helped me secure my dream home. I would recommend Bliss to anyone who is after a professional and personable mortgage advisor.
Amanda worked extremely hard and was really efficient is securing a fixed deal for me at a time when rates were being removed across the board. I would recommend them to anyone.
Andrew M.
Excellent from start to finish. Every decision and option were made clear to us about the implications and any questions we had were answered in a timely manner, making remortgaging easier than I imagined it would be. Thank you to Bliss Financial Solutions for excellent service and attention to personal details that really made us feel like our priorities were put first. We will use again at our next remortgage and would recommend to anyone.
Melissa B.
Excellent company, fast and responsive and a professional outfitI appreciate Amy’s swift advice on a deal to secure a good rate 12hrs before the rate changed
Adam L.
What a fantastic service. I contacted Amanda via a friend recommendation. She was friendly and helpful. She passed me to Amy who was my advisor for the whole process.As a first time buyer, I was like a rabbit in the headlights. But Amy reassured me and made the whole thing a breeze, with regular contact and updates along the way.Thank you to you all.Highly recommend 😁See you when it's time to remortgage 😉
Steven R.
We have used Bliss/Amanda for a number of mortgages now and the service has always been second to none!We have had complicated financial situations that the Bliss team have used their extensive knowledge to support and ensure we receive the best product for us.We always recommend Bliss to all our friends and family!Thank you to Amanda, Amy and Sophie
Samantha B.
The staff are amazing and very helpful throughout the whole process, the rates are very competitive and the after sales service is second to none, I would highly recommend Bliss Financial to anyone.MarkAspire Property Rentals
Mark L.
Any Lyons found us an excellent mortgage deal and then helped us through a long complex legal process regarding the house. She was there for us all the way through keeping us informed and chasing up when there were delays, Thank you Amy and her team.
Ken W.
Amy has been amazing from the start of our process as first time buyers until completion. We had a few delays along the way due to waiting on a new build but Any was there to guide us through every step of the way to help us rearrange another mortgage and kept us regularly updated on the process. I have already recommended her to friends and family and wouldn’t hesitate to use her again when we remortgage.
Melissa N.
Really happy with the service from Amy and Bliss Financial Solutions - Amy made sure everything was as straight forward as possible, was super communicative and really easy to deal with. Would not hesitate to recommend them.
Rachael G.
Amanda was very helpful. Gave advice over a number of options for my situation. Many other companies didn't even bother calling me back. Will definitely go back to Bliss again in the future.
Lesley C.
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